Transport Ins. Co. v. Terrell Trucking, Inc.

• Decision Date: 25 June 1987
• Docket Number: No. 36A04-8604-CV-113,36A04-8604-CV-113
• Citation: 509 N.E.2d 220
• Parties: TRANSPORT INSURANCE CO., Appellant (Defendant Below), v. TERRELL TRUCKING, INC., Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 220

509 N.E.2d 220

TRANSPORT INSURANCE CO., Appellant (Defendant Below), v. TERRELL TRUCKING, INC., Appellee (Plaintiff Below).

No. 36A04-8604-CV-113.

Court of Appeals of Indiana,

Fourth District.

June 25, 1987.

John W. Mead, Mead, Mead & Thompson, Salem, for appellant.

William E. Vance, Vance & Phillips, Seymour, for appellee.

YOUNG, Judge.

Transport Insurance Company appeals from a judgment of $58,365 in compensatory and $6,000 in punitive damages rendered in favor of its insured, Terrell Trucking, Inc. Transport raises the following Issues:

1) whether the trial court erred in denying its petition for declaratory judgment in which it requested that the trial court declare that the payment of loss provisions rather than the limit of liability provisions of the insurance contract controlled the parties' dispute;

2) whether the trial court erred in modifying an instruction and in refusing to give others tendered by it;

3) whether the jury's award of $58,365 in compensatory damages is excessive and not supported by sufficient evidence; and

4) whether the trial court erred in denying its motion for judgment on the evidence as to the issue of punitive damages and whether the jury's award of punitive damages is supported by clear and convincing evidence.

We affirm.

In January of 1983, Gerald Terrell bought a 1971 International Harvester truck tractor for $5,000. The truck was transferred to Terrell Trucking, Inc. and $3,400 in engine repairs were performed. Additionally, a roof-mounted air conditioner was installed. In November of 1983, Terrell purchased an insurance policy issued by Transport Insurance Company. Although Gerald Terrell believed the truck was worth between $10,000 and $12,000, he insured the truck for only $7,000 because that amount of coverage satisfied the bank which had taken the truck as collateral and because that was all that Terrell could afford.

On March 28, 1984, the truck was damaged in an accident. Gerald Terrell informed the agent who sold him the policy of the claim and the agent informed Transport. Transport employed an adjuster and one of the adjuster's employees, John Winkler, was assigned to adjust Terrell's claim.

Winkler appraised the cost of repair to the truck as $8,929.40 and on April 18, 1984 offered Terrell two settlement options. Under the first option, Transport would pay the $7,000 stated policy limit, less the $500 deductible, and keep the truck as salvage. Under the second option, Transport would pay $3,313 and Terrell could keep the truck for its salvage value which Winkler estimated to be $3,100. Terrell refused both of these offers, believing that the truck could be repaired for less than the policy limit and that the salvage value of the truck was greater than $3,100.

After declining the options, Terrell requested that he and Winkler meet to review the records on the truck. Winkler refused and stated that he had decided the truck was a total loss and that Terrell could take it or leave it. Terrell replied that he thought Winkler was being a "crooked-son-of-a-bitch." (R. 253).

A few days after the conversation, Terrell received a $6,698 estimate to repair the truck. Although he took this estimate to Winkler's office and that office showed copies being forwarded to Transport, Winkler claimed that he did not receive the estimate. Terrell sent another copy of the estimate to Winkler. After Winkler and Transport received the estimate, Transport's regional claims supervisor refused to agree to pay the $6,698 amount because it was close to the policy limits. He anticipated that further damage would be discovered once the truck was torn down. Apparently, the parties did not communicate with each other between July 20, 1984 and September 11, 1984.

On September 24, 1984, Winkler and the repairman met at Terrell's residence and the two reached a $5,523.96 repair contract price on the truck. The difference between the estimate and contract price was due to the fact that the contract price was based on after market rather than original International parts. After Winkler and the repairman reached the agreement, Winkler told Terrell that "we'd had this settled six months ago ... if you hadn't called me a crooked son of a bitch, but ... when you done that, I put your folder to the bottom of the file and I let you set." (R. 257) Terrell agreed to accept the contract price if Transport would pay his attorney fees. Winkler stated that if Terrell's attorney fees were not over $1,000 he would recommend Transport settle and that Terrell should have a check within two weeks. Transport's regional supervisor, however, refused to authorize the repairs because he believed they still would have exceeded the policy limits.

At the end of September, Transport offered to settle for the $7,000 policy limits less the deductible, towing and storage bills. It would keep the truck as salvage unless Terrell wanted the truck, then it would sell it back to him. Terrell's attorney refused and filed a complaint on Terrell's behalf on October 10, 1984. The complaint requested punitive as well as compensatory damages.

Prior to trial, Transport petitioned the trial court to declare that the payment of loss provisions rather than the limit of liability provisions of the policy controlled its dispute with Terrell. The court denied this petition. At trial, Gerald Terrell testified that the truck brought in between $3,000 and $3,500 a month for the three months prior to the accident. Documentary evidence showed the truck generated $9,635.70 in net earnings during this period. Transport's regional claims supervisor admitted that Terrell was entitled to have the truck repaired unless it was a total loss. He also admitted that Transport was entitled to salvage only if the truck was a total loss. The jury returned a verdict in favor of Terrell in the amount of $58,365 in compensatory and $6,000 in punitive damages.

Transport first contends that the trial court erred in denying its petition for declaratory judgment. This petition requested the trial court to declare that the payment of loss provisions rather than the limit of liability provisions of the insurance contract controlled the parties' dispute. These provisions provided:

SECTION D--AUTOMOBILE PHYSICAL DAMAGE INSURANCE (Non-Fleet) ...

II. LIMIT OF LIABILITY: The limit of the company's liability for loss to any one covered automobile shall not exceed the least of the following amounts:

(a) the actual cash value of such covered automobile, or if the loss is to a part thereof the actual cash value of such part, at time of loss; or

(b) what it would then cost to repair or replace such covered automobile or part thereof with other of like kind and quality, with deduction for depreciation, or

(c) the limit of liability stated in the declarations as applicable to 'each covered automobile' under the coverage afforded for the loss to such covered automobile, provided that if such limit of liability is expressed as a stated amount it shall, with respect to a covered automobile newly acquired during the policy period and not described in the declarations, but deemed as having been replaced by 'actual cash value'.

(d) If the amount of loss is less than the limit of liability stated in the declarations then the company's liability shall be limited to the lesser of:

(i) the portion of the loss that the limit of liability of the vehicle bears to the actual cash value of the vehicle at the time of loss; or

(ii) the actual cash value of vehicle.

If the amount of loss exceeds the actual cash value or the limit stated in the policy, the company may at it's option, repair the insured unit or pay the insured the actual cash value or market value, not to exceed the stated value, and such payment shall entitle the company to all salvage remaining after such loss....

V. CONDITIONS ...

2. Payment for Loss: With respect to any loss covered by this insurance, the company may pay for said loss in money, or may:

(a) repair or replace the damaged or stolen property, or

(b) return at its expense any stolen property to the named insured, with payment for any resultant damage thereto, at any time before the loss is so paid or the property is so replaced, or

(c) take all or any part of the damaged or stolen property at the agreed or appraised value, but there shall be no abandonment to the company. (R. 242-43).

Transport argues that once it determined the amount of loss under the limit of liability provisions, it was entitled to select the method of payment for that loss under the payment of loss provisions. From this argument, Transport asserts that because it had determined the amount of Terrell's loss, the payment of loss provisions unambiguously controlled its dispute with Terrell and it was therefore entitled to have the court declare to the jury that those provisions were controlling. While the construction of an unambiguous written contract is a matter of law for the trial court's determination, Midwestern Indemnity Co. v. Leffler Construction Co. (1984), Ind.App., 463 N.E.2d 1130, Transport's argument must fail because the payment of loss provisions do not unambiguously control its dispute with Terrell.

The central dispute between Transport and Terrell was the amount of loss sustained by Terrell, not the method of payment. Although Transport may be correct in asserting that it was entitled to select the method of payment once the amount of loss was determined, it incorrectly assumes that it is entitled to be the sole determiner as to the amount of loss. Nothing in the insurance contract gives Transport this authority. On the contrary, through the following provision, the contract contemplates that a dispute as to the amount of loss may occur and provides a remedy for such an occurrence:

SECTION D--AUTOMOBILE PHYSICAL DAMAGE INSURANCE (Non-Fleet) ...

V. CONDITIONS ...

3. Appraisal: If the named insured and the company fail to agree as to the...